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The biggest challenge in writing a column like this is coming up with a snappy opening that grabs readers’ attention. That would be simple if I was writing about a new building technology that slashed new-home construction costs and eased affordability challenges, or if we had a housing market teetering on the edge of collapse. While I’m unfortunately not aware of any new cost-cutting construction innovations, I’m happy to report a housing crash is not imminent. So I’ll just stick to some facts and thoughts on our new-home market, reflect on the year that was, and look ahead to the year that’s approaching.

A look at 2014

Sales activity

With Metro Vancouver’s new multi-family home market on track to sell more condominiums and townhomes in 2014 than in any year since 2007, I can safely suggest our market has officially recovered from the downturn of 2008 and 2009. The over 13,000 new multi-family homes forecast to be absorbed this year is nearly 13 per cent more than the previous post-downturn high in 2011.

I can hear many reading the last sentence and thinking (or screaming): “Yikes! The housing bubble’s gonna burst for sure.”

It’s important, however, not to confuse a housing bubble with affordability challenges. Housing bubbles are typically characterized by rampant buying by short-term speculators and desperate end users, leading to steep price increases over a short period. That’s what we saw in 2006 and 2007 when anyone with access to financing could sell out a condo project.

But what we’ve seen in recent years is steady demand from patient and selective end users, as well as investors with a longer-term view of their purchase. Any new-home price increases have been gradual and generally in line with inflation. We don’t anticipate any substantial price increases in the foreseeable future.

Trends

The most significant trend of the year was an increased demand for larger units from downsizing empty nesters and newer immigrant families. This forced many developers back to the drawing board to combine the smaller units they’d originally designed into larger units they would have been afraid to incorporate into their plans a couple of years ago.

We also saw the first-time buyer returning to the market after being kept on the sidelines by stricter financing qualification requirements — in large part, because of the ‘bank of Mom and Dad’. This group’s resurgence was felt most in the low rise and townhome sectors of the region’s suburban markets.

An additional trend in 2014: new multi-family-home developers with projects in the Tri-Cities, New Westminster and Burnaby were noting higher demand and sales activity since the full-rate tolls went into effect on the Port Mann Bridge.

What to expect in 2015

The hardest thing about predicting the future is that unforeseen events can throw predictions out the window. Nevertheless, here’s what I expect to see in the coming year.

• Buyers will find the best value for new condominiums and townhomes in the Tri-Cities, New Westminster, Richmond, the Fraser Valley and Maple Ridge.

• There will be little to no increase in pricing of most new multi-family product due to the anticipated increased competition in key neighbourhoods.

• The sales volume will be comparable to 2014, but spread across a greater number of new-home projects as more developments are released in downtown Vancouver, the Cambie Corridor, Metrotown and Brentwood in Burnaby, West Coquitlam, Surrey City Centre and South Surrey.

A wish list for the coming year

While Metro Vancouver boasts one of the healthiest and most stable housing markets in the world, there is always room for improvement.

I’d like to see:

• Balanced market conditions

Our current balanced market conditions provide pricing stability for homebuyers and force the development industry to work harder to design and build better new homes.

• More supply and competition

The most effective tool we’ve seen for limiting new-home price increases — and in some cases, price reductions — is competition. Richmond, the Tri-Cities, Surrey and Langley have been some of the most competitive areas of Metro Vancouver in recent years, and have also experienced lower prices or nominal price increases for new homes in recent years. It’s not a matter of increasing density, it’s about getting new-home projects approved quickly to create a more competitive environment.

• Creative solutions for affordable housing

More competition won’t help those in our market already unable to afford our housing. I’d love to see more out-of-the-box thinking and solutions to creating housing models that help more people get into the housing market and building equity.

• Reasoned neighbourhood planning discussion

I wish for municipal planners and developers to address communities’ needs and demonstrate how neighbourhoods can evolve without losing what makes them great. I’d like to see residents have an open mind when working with planners and developers to enhance their neighbourhoods and get the new and/or improved amenities and services they’re seeking.

• Development industry props

Not that I’ve seen any of them ask for it, but I wish for a pat on the back for our local development industry, one of most sophisticated in the world — just ask anyone who’s travelled much. Developers provide a valuable service — they build roofs over our heads — while hoping to make a profit in exchange for a level of risk most of us can’t stomach. The industry employs thousands and contributes hundreds of millions of dollars to our economy and to municipalities to help build new neighbourhood services and amenities. After polling a few clients, I was astounded to learn they paid a combined $38.6 million in fees and contributions to develop six recent highrise condominium projects in Burnaby and Vancouver. Multiply that by the 300 or so projects being developed across the region, and you get a sense of how much the industry contributes to communities, while allowing municipal politicians to keep property taxes relatively low.

Most of all, I wish everyone a warm and wonderful holiday season and a healthy and prosperous new year.

Michael Ferreira is the managing principal of Urban Analytics Inc., which has been tracking the new-home market in Metro Vancouver since 1994, providing advisory services to development-industry stakeholders.

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Reflections on the year that’s departing, and expectations for the year that’s days away

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